Fuzzy Math From Iran Hawks

July 21, 2014

Being a Washington analyst means never having to say you’re sorry. And so it has been throughout the diplomatic process with Iran, where naysayers who stridently opposed talks have found themselves dealing with the reality of negotiations over the Islamic Republic’s nuclear program by not dealing at all with their past records on the matter.

The best recent example of this phenomenon can be found in the latest report from the Foundation for Defense of Democracies (FDD), one of the think tank’s whose work and influence was discussed at length by myself and Eli Clifton in a feature for last week’s edition of The Nation.

Only days before Iran and world powers announced an extension of talks for an additional four months, the FDD put out a report seeking to quantify the sanctions relief Iran had reaped from the first six months of the interim deal. What stands out most about the report is its fuzzy math, which leads it to fuzzy conclusions.

The FDD’s report, “Sanctions Relief: What did Iran Get?,” posited that Iran’s sanctions relief has been greater than the Obama administration has let on. FDD offers that Iran has received some $11 billion in direct relief and even more in indirect relief—that is, the benefits Iran has accrued from its stabilizing economy (more on that in a bit).

That figure is at odds with what FDD’s executive director Mark Dubowitz predicted it would be after Iran and world powers inked an interim agreement in November, laying the groundwork for the current talks. At the time, the United States left most of its sanctions in place but lifted its bans on certain types of transactions and unfroze a portion of Iranian assets abroad. The Obama administration said the deal would bring the Iranians about $7 billion in relief. Dubowitz argued that direct sanctions relief alone—leaving aside any additional indirect benefits—would be closer to a windfall of $20 billion.

Now that the first six months of the interim agreement has run its course, Dubowitz revised his numbers downward by nearly half, to the $11 billion figure for direct sanctions relief. When asked about the discrepancy on Twitter, he deflected by claiming the distinction between direct and indirect relief—one he’d readily made in November, with inflated numbers—was “artificial.”

Even the $11 billion number needs to be carefully considered. For instance, in his recent analysis, Dubowitz includes the profits Iran has reaped from its sale of condensates, a liquid product formed when certain types of natural gas are pumped to the surface. FDD estimates that condensates accounted for about $5 billion of Iranian exports, a figure that was lumped into the $11 billion in direct relief.

But condensates, as FDD admits later in its analysis, were not exempted from sanctions by the Joint Plan of Action signed by Iran and world powers in Geneva in November. Instead, Iran is able to sell condensates because of what FDD calls a”loophole” in a 2011 sanctions law. Without the inclusion of $5 billion in condensate exports, Dubowitz’s figure of $11 billion in sanctions relief quickly falls below the Obama administration’s initial estimate of $7 billion.

What’s more, FDD’s analysis veers towards portraying all of Iran’s economic gains as stemming from the November deal. But that discounts the role played by the change in Iranian leadership last summer. As The Wall Street Journal reported recently, the administration of the new Iranian president, Hassan Rouhani, has takensteps—such as raising interest rates and cutting subsidies—to stabilize the economy independent of any sanctions relief.

Notably, Dubowitz pooh-poohed Rouhani’s election as unimportant, a contention rendered implausible not only by the Iran’s improved economic management, but also by what all parties regard as serious Iranian engagement on the nuclear file.

The upshot of the FDD analysis is that the US must keep up pressure on Iran. With his past support for using sanctions as a tool of regime change—an all-too-frequent goal of sanctions hawks—one has to wonder if Dubowitz, as he claims, really wants diplomacy to succeed.